Does Your Salary Meet the Requirement to Achieve the Maximum Social Security Benefit?

• Author: Wilbert Raynor
• Posted: 2024-03-20

For many retirees, Social Security is a lifeline on which they rely heavily. According to the Transamerica Center for Retirement Studies, 41% of baby boomers expect Social Security benefits to be their primary income source during retirement.

While the average retired worker collects around $1,800 per month from Social Security, from January 2024, the maximum amount one can receive in benefits will rise to $4,873 each month.

To reach the maximum payout, specific criteria need to be fulfilled. The length of a person's career, the age they begin claiming their benefits, and their salary all play a critical role in determining the amount they receive in benefits. Here is a breakdown of what someone needs to reach the maximum benefit amount in 2024.

First of all, having at least 35 years of work experience is necessary. The Social Security Administration uses an average of an individual’s earnings in their highest-earning 35 years to calculate their benefit amount.

Individuals must have worked for at least 35 full years before taking benefits to reach the maximum payments. Those who have not worked for 35 years will have zeros added to their earnings average for each month under 35 years worked, reducing their benefit amount.

Next, delaying the benefit claim is a smart strategy. The longer individuals delay claiming their benefits, the higher their monthly payout will be. While FRA depends on birth year, waiting till age 70 to claim benefits, instead of the FRA of 67, provides the maximum benefits.

If someone claims at age 67, the maximum benefit is $3,911 per month, while at age 62, the maximum benefit is only $2,710 per month.

Finally, reaching the wage limit throughout a person’s career is incredibly crucial. The wage limit is the highest level of income subject to Social Security taxes that can impact a worker's monthly benefit amount.

For 2023 the limit is $160,200 per year, and in 2024 it increases to $168,600 per year. The closer individuals can get to the limit; the higher their monthly benefits will be.

In conclusion, it is not easy to achieve the maximum $4,873 monthly payments, but it can be accomplished by delaying retirement, working for at least 35 years, and consistently earning the wage limit throughout their career.

However, it is important to note that taking small steps in the right direction can drastically improve your financial security during retirement.